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Issues involved: Appeal against order of CIT (A) for assessment year 2000-01.
Details of the Judgment: 1. Reopening of Assessment u/s 147: The assessee, a consulting engineering company, claimed deduction u/s 36(1)(xi) for expenditure on making Computer Systems Y2K compliant. The AO reopened the assessment u/s 147, alleging that the deduction was wrongly claimed as the expenditure was capital in nature. The CIT (A) allowed the appeal, holding that the notice u/s 148 was barred by limitation as there was no failure on the part of the assessee to disclose material facts. The Tribunal confirmed this decision, stating that the reassessment proceeding was vitiated, bad in law, and not sustainable. The impugned notice u/s 148 was served after the expiry of four years from the end of the relevant assessment year, rendering it invalid. 2. Validity of Proceedings u/s 147: The AR challenged the assessment on grounds of validity of proceedings u/s 147, stating that the notice issued u/s 148 was vague and not served as per law. The CIT (A) held that the AO failed to dispose of the assessee's objection by a separate speaking order before proceeding further, as required by law. Citing relevant case law, the Tribunal upheld the CIT (A) decision, emphasizing that the notice u/s 148 was barred by limitation and the reassessment proceeding was not sustainable. 3. Change of Opinion: The AR contended that the proceedings were barred by limitation and constituted a change of opinion. The Tribunal agreed with the CIT (A) that there was no failure on the part of the assessee to disclose material facts necessary for assessment. The reassessment was deemed invalid as the AO did not make deeper investigation into the claim, and the notice u/s 148 was issued beyond the statutory time limit. 4. Final Decision: The Tribunal dismissed the Revenue's appeal, affirming the CIT (A) decision that the reassessment proceeding was vitiated, bad in law, and not sustainable. The impugned notice u/s 148 was deemed invalid due to being served after the prescribed time limit. The Tribunal upheld the decision that there was no failure on the part of the assessee to disclose material facts, rendering the reassessment proceeding untenable. *Order pronounced in the open court on 25th January, 2017.*
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